Although the CSA scores are not currently publicly available, this development is likely to be temporary. As a result, once the program has been revamped, our fleet could be ranked poorly as compared toworse or better than our competitors, and the safety ratings of our motor carrier operations could be adversely impacted. Our network of third-party transportation providers may experience a similar result. A reduction in safety and fitness ratings may result in difficulty attracting and retaining qualified independent contractors and could cause our customers to direct their business away from usXPO and to carriers with more favorable CSA scores, which would adversely affect our results of operations.

In the past, the subsidiaries through which we operate our expedited and intermodal drayage operations have exceeded the established intervention threshold in certain of the BASICs, and we may exceed those thresholds in the future. Depending on our ratings, we may be prioritized for an intervention action or roadside inspection, either of which could adversely affect our results of operations, or customers may be less likely to assign loads to us. We cannot predict the extent to which CSA requirements or safety and fitness ratings under SMS or SFD could adversely affect our business, operations or ability to retain compliant drivers, or those of our subsidiaries, independent contractors or third-party transportation providers.

Our subsidiaries offering expedited air charter transportation are subject to regulation by the Transportation Security Administration (“TSA”) of the DHS regarding air cargo security for all loads, regardless of origin and destination. XPO Global Forwarding, Inc. (“XGF”), XGFA and XPO Air Charter, alsoLLC are regulated as “indirect air carriers” by the DHS and the TSA. These agencies provide requirements, guidance and, in some cases, administer licensing requirements and processes applicable to the freight forwarding industry. We must actively monitor our compliance with such agency requirements to ensure that we have satisfactorily completed the security requirements and qualifications and implemented the required policies and procedures. These agencies generally require companies to fulfill these qualifications prior to transacting various types of business. Failure to do so could result in penalties and fines. The air cargo industry is also subject to regulatory and legislative actions that could affect the economic conditions within the industry by requiring changes in operating practices or influencing the demand for and the costs of providing services to clients. We cannot predict the extent to which any such regulatory or legislative actions could adversely affect our business and operations, but we strive to comply with and satisfy agency requirements.

ForRegarding our international operations, XGF XGFA and XCCSXGFA are members of the International Air Transportation Association (“IATA”), a voluntary association of airlines and freight forwarders that outlines operating procedures for freight forwarders acting as agents or third-party intermediaries for itsIATA members. A substantial portion of ourXPO’s international air freight business is completedtransacted with other IATA members.

For our international oceanic freight forwarding business,Additionally, XGF, XGFA and XPO Ocean Lines, Inc. (“XOL”),XCCS are each registered as an Ocean Transportation Intermediary (“OTI”) and ocean freight forwarders by the U.S. Federal Maritime Commission (“FMC”), which establishes the

Our international freight forwarderforwarding operations make us subject us to regulations of the U.S. Department of State, the U.S. Department of Commerce and the U.S. Department of Treasury, and to various laws and regulations of the other countries where we operate. RegulationsThese regulations cover matters, such as what commodities may be shipped to what destinationdestinations and to what end-user,end-users, unfair international trade practices, and limitations on entities with which we may conduct business.

independent contractors. Federal legislators have introduced legislation in the past to make it easier for tax and other authorities to reclassify independent contractors as employees, including legislation to increase the recordkeeping requirements for employers of independent contractors and to heighten the penalties of employersfor companies who misclassify their employeesworkers and are found to have violated employees’ overtime and/or wage requirements. Additionally, federal legislators have sought to abolish the current safe harbor allowing taxpayers meetingthat meet certain criteria to treat individuals as independent contractors if they are following a long-standing,longstanding, recognized practice. Federal legislators also sought to expand the Fair Labor Standards Act to cover “non-employees” who perform labor or services for businesses, even if the “non-employees”said non-employees are properly classified as independent contractors; require taxpayers to provide written notice to workers based upon their classification as either an “employee”employee or a “non-employee”;non-employee; and impose penalties and fines for violations of the notice requirements requirement and/or “employee” or “non-employee”for misclassifications. Some states have putlaunched initiatives in place to increase their revenues from items such as unemployment, workers’ compensation and income taxes, and athe reclassification of independent contractors as employees wouldcould help states with this initiative.those initiatives. Taxing and other regulatory authorities and courts apply a variety of standards in their determinationdeterminations of independent contractor status. If ourXPO’s independent contractor drivers are determined to be our employees, we would incur additional exposure under some or all of the following: federal and state tax, workers’ compensation, unemployment benefits, and labor, employment and tort laws, including for prior periods, as well as potential liability for employee benefits and tax withholdings.

We maintain insurance for commercial automobile liability, truckers’ commercial automobile liability, commercial general liability, cargo/warehouse legal liability, workers’ compensation and employers’ liability, and umbrella and excess umbrella liability, with coverage limits, deductibles and self-insured retention levels that we believe are reasonable given the varying historical frequency, severity and timing of claims. However, we cannot provide assurance that ourCertain actuarial assumptions and management judgments are made for insurance coverage will effectively protect us in the eventreserves and are subject to a degree of claims made against us.variability.

As of December 31, 2015, we2018, the Company had approximately 89,000more than 100,000 full-time and part-time employees. We recognize our trained staff of employees asOur employee base is one of our most critical resources, and acknowledgewe view the recruitment, training and retention of qualified employees as being essential to our ongoing success. We believe that we have good relations with our employees.employees, with strong programs in place for communication and professional development.

We provide belowThe following information regardingrelates to each of our executive officers.officers:

XPO Logistics, Inc. was incorporated in Delaware on May 8, 2000. Our executive office is located in the United States at Five Greenwich Office Park,American Lane, Greenwich, Connecticut 06831. Our telephone number is (855) 976-4636.976-6951. Our stock is listed on the New York Stock Exchange (“NYSE”) under the symbol “XPO”.XPO.

The transportation industry in North America and Europe historically has experienced cyclical fluctuations in financial results due to economic recession, downturns in the business cycles of our customers, increases in the prices charged by third-party carriers, interest rate fluctuations and other U.S. and global economic factors beyond our control. During economic downturns, reduceda reduction in overall demand for transportation services will likely reduce demand for our services and exert downward pressures on our rates and margins. In periods of strong economic growth, demand for limited transportation resources can result in increased network congestion and resulting operating inefficiencies. In addition, any deterioration in the economic environment subjects our business to various risks that may have a material impact on our operating results and cause us to not reach our long-term growth goals.future prospects. These risks may include the following:

Competition in the transportation services industry is intense. Increased competition may lead to revenue reductions,a reduction in revenues, reduced profit margins, or a loss of market share, any one of which could harm our business. There are many factors that could impair our profitability, including the following:

Our LTL and full truckload operations require significant investments in revenue equipment and our LTL operations also require significant investments in freight service centers. The amount and timing of our capital investments depend on various factors, including anticipated freight volume levels and the price and availability of appropriate-useappropriate property for service centers and newly-manufactured tractors (which are subject to restrictive Environmental Protection Agency engine-design requirements).tractors. If our anticipated service center and/or fleet requirements differ materially from actual usage, our capital-intensive business units, specifically LTL and full truckload, may have too much or too little capacity. We attempt

Our contract logistics operations can require a significant commitment of capital in the form of shelving, racking and other warehousing systems that may be required to mitigateimplement warehouse-management services for our customers. To the risk associatedextent that a customer defaults on its obligations under its agreement with too much or too little revenue equipment capacity by adjustingus, we could be forced to take a significant loss on the unrecovered portion of this capital expenditures and by utilizing short-term equipment rentals and sub-contracted operators in order to match capacity with business volumes. cost.

Our investments in revenue equipment and LTL service centers depend on our ability to generate cash flow from operations and our access to credit, debt and equity capital markets. A decline in the availability of these funding sources could adversely affect us.our financial condition and results of operations.

Our 2016While we intend for our acquisitions to improve our competitiveness and mid-termprofitability, we cannot be certain that our past or future acquisitions will be accretive to earnings or otherwise meet our operational or strategic expectations. Acquisitions involve special risks, including accounting, regulatory, compliance, information technology or human resources issues that could arise in connection with, or as a result of, the acquisition of the acquired company, the assumption of unanticipated liabilities and contingencies, difficulties in integrating acquired businesses, possible management distraction, and the inability of acquired businesses to achieve the levels of revenue, profit,

If the performance of our reporting units or an acquired business varies from our projections or assumptions, or if estimates about the future profitability of our reporting units or an acquired business change, our revenues, earnings or other aspects of our financial targets are dependent oncondition could be adversely affected. We may also experience difficulties in connection with integrating any acquired companies into our abilityexisting businesses and operations, including our existing infrastructure and information technology systems. The infrastructure and information technology systems of acquired businesses could present issues that we were not able to realize significant synergies with respectidentify prior to the acquisition and that could adversely affect our recent acquisitions, especiallyfinancial condition and results; we have experienced challenges of this nature relating to the October 2015 Con-way acquisition. Weinfrastructure and systems of our businesses that we recently acquired. Also, we may not realize any or all of the synergies that we currently anticipate from any acquisitions that we have undertaken.past and potential future acquisitions. Among the synergies that we currently expect to realize are cross-selling

We have grown rapidly and substantially over the prior four years, including by expanding our internal resources, making acquisitions and entering into new markets, and we intend to continue withto focus on rapid growth, primarily organically in 2016.including organic growth and additional acquisitions. We may experience difficulties and higher-than-expected expenses in executing this strategy as a result of unfamiliarity with new markets, changechanges in revenue and business models, and entering into new geographic areas.areas and increased pressure on our existing infrastructure and information technology systems.

Our growth will place a significant strain on our management, operational, financial and financialinformation technology resources. We will need to continually improve existing procedures and controls, as well as implement new transaction processing, operational and financial systems, and procedures and controls to expand, train and manage our employee base. Our working capital needs will continue to increase substantially as our operations grow. Failure to manage our growth effectively, or obtain necessary working capital, could have a material adverse effect on our business, results of operations, cash flows, stock price and financial condition.

We rely heavily on our information technology systems to efficiently run our business, andbusiness; they are a key component of our customer-facing services and internal growth strategy. In general, we expect our customers to continue to demand more sophisticated, fully integrated information systems from their transportation and logistics providers. To keep pace with changing technologies and customer demands, we must correctly interpret and address market trends and enhance the features and functionality of our proprietary technology platform in response to these trends, whichtrends. This process of continuous enhancement may lead to significant ongoing software development costs. Wecosts, which will continue to increase if we pursue new acquisitions of companies and their current systems. In addition, we may be unablefail to accurately determine the needs of our customers and theor trends in the transportation services industryand logistics industries or we may fail to design and implement the appropriate responsive features and functionality offor our technology platform in a timely and cost-effective manner, whichmanner. Any such failures could result in decreased demand for our services and a corresponding decrease in our revenues. Despite testing, external and internal risks, such as malware, insecure coding, “Acts of God,” data leakage and human error pose a direct threat to the stability or effectiveness of our information technology systems and operations. We may also be subject to cybersecurity attacks and other intentional hacking. Any failure to identify and address such defects or errors or prevent a cyber-attack could result in service interruptions, operational difficulties, loss of revenues or market share, liability to customers or others, diversion of resources, injury to our reputation and increased service and maintenance costs. Addressing such issues could prove to be impossible or very costly and responding to resulting claims or liability could similarly involve substantial cost.

We must maintain and enhance the reliability and speed of our information technology systems to remain competitive and effectively handle higher volumes of freight through our network and the various service modes we offer. If our information technology systems are unable to manage additional volume for our operations as our business grows, or if such systems are not suited to manage the various service modes we offer, our service levels and operating efficiency could decline. We expect customers to continue to demand more sophisticated, fully integrated information systems from their transportation providers. IfIn addition, if we fail to hire and retain qualified personnel to implement, protect and maintain our information technology systems, or if we fail to upgrade our systems to meet our customers’ demands, our business and results of operations could be seriously harmed. This could result in a loss of customers or a decline in the volume of freight we receive from customers.

We are developing proprietary information technology for all of our business segments. Our technology may not be successful or may not achieve the desired results. Weresults and we may require additional training or different personnel to

successfully implement this system, all oftechnology. Our technology development process may be subject to cost overruns or delays in obtaining the expected results, which may result in additional expense, delays in obtaining results or disruptions to our operations.

We may also be subject to cybersecurity attacks and other intentional hacking. Any failure to identify and address such defects or errors or prevent a cyber-attack could result in service interruptions, operational difficulties, loss of revenues or market share, liability to our customers or others, the diversion of corporate resources, injury to our reputation and increased service and maintenance costs. Addressing such issues could prove to be impossible or very costly and responding to resulting claims or liability could similarly involve substantial cost. In addition, acquired companies will needrecently, regulatory and enforcement focus on data protection has heightened in the U.S. and abroad (particularly in the European Union), and failure to be on-boarded ontocomply with applicable U.S. or foreign data protection regulations or other data protection standards may expose us to litigation, fines, sanctions or other penalties, which could harm our technology, which may cause additional training or licensing costreputation and disruption. In such event,adversely impact our revenue,business, results of operations and financial results and ability to operate profitably could be negatively impacted. The challenges associated with integration of our acquisitions may increase these risks.condition.

We may in the future be required to raise capital through public or private financing or other arrangements in order to pursue our growth strategy or operate our businesses. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business or ability to execute our strategy. Further debt financing may involve restrictive covenants and could reduce our profitability. If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures.

In our global forwarding, last mile and freight brokerage operations, we do not own or control the transportation assets that deliver our customers’ freight, and we do not employ the people directly involved in delivering thethis freight. In addition, in our full truckload and freight brokerage businesses (particularly our last mile delivery logistics operations, our over-the-road expedite operations and our intermodal drayage operations), and in our last mile business, we engage independent contractors who own and operate their own equipment. Accordingly, we are dependent on third-partiesthird parties to provide truck, rail, ocean, air and other transportation services and to report certain events to us, including delivery information and cargo claims. This reliance on third parties could cause delays in reporting certain events, including recognizingour ability to recognize revenue and claims. claims in a timely manner.

Our inability to maintain positive relationships with independent transportation providers could significantly limit our ability to serve our customers on competitive terms. If we are unable to secure sufficient equipment or other transportation services to meet our commitments to our customers or provide our services on competitive terms, our operating results could be materially and adversely affected, and our customers could switchshift their business to our competitors temporarily or permanently. ManyOur ability to secure sufficient equipment or other transportation services to meet our commitments to our customers or provide our services on competitive terms is subject to inherent risks, many of these riskswhich are beyond our control, including the following:

Our LTL services in North America and Europe and our full truckload operationsservices in Europe are conducted primarily with employee drivers. Recently, there has been intense competition for qualified drivers in the transportation industry due to a nationwide shortage of drivers. The availability of qualified drivers may be affected from time to time by changing workforce demographics, competition from other transportation companies and industries for employees, the availability and affordability of driver training schools, changing industry regulations, and the demand for drivers in the labor market. If the industry-wide shortage of qualified drivers continues, these business lines will likely continue to experience difficulty in attracting and retaining enough qualified drivers to fully satisfy customer demands. As a result of the current highly-competitive labor market for drivers, our LTL and full truckload operations may be required to increase driver compensation and benefits in the future, or face difficulty meeting customer demands, all of which could adversely affect our profitability. Additionally, a shortage of drivers could result in the underutilization of our truck fleet, lost revenue, increased costs for purchased transportation or increased costs for driver recruitment.

Our expedited transportationfreight brokerage and intermodal drayage businesses operate through fleets of vehicles that are owned and operated by independent contractors. Our last mile delivery logistics business also operates through a fleet of independent contract carriers that supply their own vehicles, drivers and helpers. These independent contractors are responsible for maintaining and operating their own equipment and paying their own fuel, insurance, licenses and other operating costs. Turnover and bankruptcy among independent contractor drivers often limit the pool of qualified independent contractor drivers and increase competition for their services. In addition, regulations such as the FMCSA Compliance Safety Accountability program may further reduce the pool of qualified independent contractor drivers. Thus, our continued reliance on independent contractor drivers could limit our ability to grow our ground transportation fleet.networks.

We are currently experiencing and expect to continue to experience from time to time in the future, difficulty in attracting and retaining sufficient numbers of qualified independent contractor drivers.drivers, and we expect to continue to experience this difficulty from time to time in the future. Additionally, our agreements with independent contractor drivers are terminable by either party upon short notice and without penalty. Consequently, we regularly need to regularly recruit new qualified independent contractor drivers to replace those who have left our fleet.networks. If we are unable to retain our existing independent contractor drivers or recruit new independent contractor drivers, our business and results of operations could be adversely affected.

The compensationrates we offer our independent contractor drivers isare subject to market conditions and we may find it necessary to continue to increase independent contractor drivers’ compensationrates in future periods. If we are unable to continue to attract and retain a sufficient number of independent contractor drivers, we could be required to increase our mileage rates and accessorial pay or operate with fewer trucks and face difficulty meeting shipper demands, all of which would adversely affect our profitability and ability to maintain our size or to pursue our growth strategy.

The independent contractor misclassification matters in which we are currently engaged involve companies that we acquired. Pursuant to the purchase agreements by which we acquired certain private companies, the former owners have agreed to indemnify us for costs and liabilities related to such class action and individual lawsuits, subject to certain limits, and we have retained purchase price holdbacks and escrows as security for such indemnification. Other than with respect to acquisitions for which our acquisition accounting measurement period remains open, we believe that we have adequate purchase price holdbacks or escrows with respect to the potential impact of loss contingencies involving classification matters that are probable and reasonably estimable. However, such holdbacks or escrows may be insufficient to protect us against the full amount of the indemnified liability, in which case we would need to fund any losses from our available liquidity sources. To the extent that we do not have indemnification rights with respect to any such liabilities, or we are unable to collect under any such indemnification agreements, any payments will require utilization of our funds and establishment of reserves.

The services we provide outside of the United States subject us to risks resulting from changes in tariffs, trade restrictions, trade agreements, tax policies, difficulties in managing or overseeing foreign operations and agents, different liability standards, issues related to compliance with anti-corruption laws such as the Foreign Corrupt Practices Act and the U.K. Bribery Act, data protection, trade compliance, and intellectual property laws of countries which do not protect our rights in our intellectual property, including our proprietary information systems, to the same extent as the laws of the United States. The occurrence or consequences of any of these factors may restrict our

ability to operate in the affected region and/or decrease the profitability of our operations in that region. As we expand our business in foreign countries, we will also be exposed to increased risk of loss from foreign currency fluctuations and exchange controls.

We operate in Europe through our majority-owned subsidiary, XPO Logistics Europe SA. Subcontracting plays a key role in our European operations and we subcontract approximately 40%55% of our transport operations there. Wein the region. As a result, we are therefore exposed to various risks arising fromrelated to managing our subcontractors, such as the risk that they do not fulfill their assignments in a satisfactory manner or within the specified deadlines. Such failures could compromise our ability to honorfulfill our commitments to our customers, comply with applicable regulations or otherwise meet our customers’ expectations. In some situations, the poor execution of services by our subcontractors could result in a customer terminating a contract. Such failures by our subcontractors could harm our reputation and ability to win new business and could lead to our being liable for contractual damages. Furthermore, in the event of a failure by our subcontractors to fulfill their assignments in a satisfactory manner, we could be required to perform unplanned work or additional services in line with the contracted service, without receiving any additional compensation. Lastly, some of our subcontractors in Europe may not be insured or may not have sufficient resources available to handle any claims from customers resulting from potential damage and losses relating to their performance of services on our behalf. As a result, the non-compliance by our subcontractors with their contractual or legal obligations by our subcontractors may have a material adverse effect on XPO Logistics Europe’sour business and financial condition.

XPO Logistics Europe also makes significant use of temporary staff. We cannot guarantee that temporary employees are as well-trained as our other employees. Specifically, we aremay be exposed to the risk that temporary employees domay not perform their assignments in a satisfactory manner or domay not comply with our safety rules in an appropriate manner, suchwhether as due toa result of their lack of experience which may cause harm to goods and people.or otherwise. If such risks materialize, they could have a material adverse effect on our business and financial condition.

We use a combination of self-insurance programs and large-deductible purchased insurance to provide for the costs of employee medical, vehicular collision and accident, cargo and workers'workers’ compensation claims. Our estimated liability for self-retained insurance claims reflects certain actuarial assumptions and judgments, which are subject to a high degree of variability. We reserve for anticipated losses and expenses and periodically evaluate and adjust our claims reserves to reflect our experience. Estimating the number and severity of claims, as well as related judgment or settlement amounts, is inherently difficult. This, along with legal expenses, incurred but not reported claims, and

other uncertainties can cause unfavorable differences between actual self-insurance costs and our reserve estimates. Accordingly, our ultimate results may differ from our estimates, which could result in losses over our reserved amounts. We periodically evaluate our level of insurance coverage and adjust insurance levels based on targeted risk tolerance and premium expense. An increase in the number and/or severity of self-insured claims or an increase in insurance premiums could have an adverse effect on us. We have a captive insurance company that participates in a reinsurance pool to reinsure a portionus, while higher self-insured retention levels may increase the impact of loss occurrences on our workers' compensation and other claims. Each company that participates in the pool cedes premiums and claims to the pool and assumes premiums and claims from the pool. The operating results of the captive insurance company are affected by the number and/or severity of claims and the associated premiums paid or received. Our financial condition, results of operations and cash flows could be adversely affected by the risk assumed and ceded by the captive insurance company. operations.

In addition, these captive insurance companies are subject to financial and insurance regulation by a foreign regulatory authority and changes in these applicable regulations could affect our liquidity and asset allocation with our captive insurance companies.

Following our acquisitions of ND and Con-way, we nowWe maintain defined benefit pension plans and a postretirement medical plan. Our defined benefit pension plans include funded and unfunded plans in the United States and the United Kingdom. A decline in interest rates and/or lower returns on funded plan assets may cause increases in the expense and funding requirements for these defined benefit pension plans and for our postretirement medical plan. Despite past amendments that froze our defined benefit pension plans to new participants and curtailed benefits, these pension plans remain subject to volatility associated with interest rates, inflation, returns on plan assets, other actuarial assumptions and statutory funding requirements. In addition to being subject to volatility associated with interest rates, our postretirement medical plan remains subject to volatility associated with actuarial assumptions and trends in healthcare costs. Any of the aforementioned factors could lead to a significant increase in the expense of these plans and a deterioration in the solvency of these plans, which could significantly increase the Company’s contribution requirements. As a result, we are unable to predict the effect on our financial statements associated with our defined benefit pension plans and our postretirement medical plan.

On October 30, 2015, in connection with the Con-way acquisition, we entered into (1) a senior secured term loan credit agreement (the “Term Loan Facility”), which provided for a single borrowing of $1.6 billion, and (2) theThe Second Amended and Restated Revolving Loan Credit Agreement, as amended (the “ABL Facility”) that increased, the commitment to $1.0 billion. Both the ABL Facilitysenior secured term loan credit agreement, as amended (the “Term Loan Facility”) and the Term Loan Facilityunsecured credit agreement (the “Unsecured Credit Agreement”), provide for an interest rate based on LIBORLondon Interbank Offered Rate (“LIBOR”) or a Base Rate, as defined in the agreements, plus an applicable margin. Our European trade receivables securitization program (the “Receivables Securitization Program”) provides for an interest rate at lenders’ cost of funds plus an applicable margin. Our financial position may be affected by fluctuations in interest rates since the ABL Facility, Term Loan Facility, Unsecured Credit Agreement and ABL FacilityReceivables Securitization Program are subject to floating interest rates. ARefer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” for the impact on interest expense of a hypothetical 100-basis-point100 basis point increase in the interest rate would increase our annual interest expense by $16.0 million under the Term Loan Facility and by $10.0 million under the ABL facility assuming that the full $1.0 billion was drawn.rate. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political

conditions and other factors beyond our control. A significant increase in interest rates could have an adverse effect on our financial position and results of operations.

The economic uncertainties relating to eurozone monetary policies may cause the value of the euro to fluctuate against other currencies. Currency volatility contributes to variations in our sales of products and services in impacted jurisdictions. For example, in the event that one or more European countries were to replace the euro with another currency, our sales into such countries, or in Europe generally, would likely be adversely affected until stable exchange rates are established. Accordingly, fluctuations in currency exchange rates could adversely affect our business and financial condition and the business of the combined company.

While our primary focusFollowing a referendum in June 2016 is on integrating our recent acquisitions,in which voters in the mid-United Kingdom (“U.K.”) approved an exit from the European Union (“EU”), the U.K. government initiated a process to long-term,leave the EU (a process often referred to as “Brexit”) and has begun negotiating the terms of the U.K.’s future relationship with the EU. The likely exit of the U.K. from the EU will have uncertain impacts on our transportation and logistics operations in Europe. In 2018, we may continue to expand through acquisitions to take advantagederived approximately 38% of market opportunities we perceive in our current markets (transportationrevenue from the U.K. and logistics)Europe, including 12% from the U.K. Any adverse consequences of Brexit, such as well as new markets that we may enter. However, if we choose to make acquisitionsa deterioration in the future, we may experience delays U.K.’s and/or be unable to makeEU’s economic condition, currency exchange rates, bilateral trade agreements or regulation of trade, including the acquisitions we desirepotential imposition of tariffs, could reduce demand for a number of reasons. Suitable acquisition candidates may not be available at purchase prices that are attractive to us our services in the U.K. and/or on terms that are acceptable to us. In pursuing acquisition opportunities, we will compete with other companies, some of which have greater financial and other resources than we do.

We may fund any future acquisitions or our capital requirements from time to time, in whole or part, through sales or issuances of our common stock or equity-based securities, subject to prevailing market conditions and our financing needs. Future equity financing will dilute the interests of our then-existing stockholders, and future sales or issuances of a substantial number of shares of our common stock or other equity-related securities may adversely affect the market price of our common stock.

We currently own 86.25% of the outstanding shares of XPO Logistics Europe, the majority-owned subsidiary through which we conduct our European operations. We may not acquire the remaining shares of XPO Logistics Europe. French law only permits “squeeze out” mergers when a holder owns more than 95% of the outstanding shares. IfSince we do not wholly-own XPO Logistics Europe, we will not have access to all of its cash flow to service our debt, as we will only receive a prorated portion of any dividends will be required to be declared pro rata.dividend based on our ownership percentage. In addition, we will be subject to limitations on our ability to enter into transactions with XPO Logistics Europe that are not on arms-length terms, which could limit synergies that we could otherwise achieve between our North American and European operations. We also may not be able to consolidate XPO Logistics Europe with XPO Logistics France SAS, XPO’s 100% owned French holding company, for tax purposes, andpurposes. Moreover, XPO Logistics Europe would be forced to continue as a listed public company in France, thereby incurring certain recurring costs.

We are subject to risks associated with the availability and price of fuel, which are subject to political, economic and market factors that are outside of our control.

Fuel expense constitutes one of the greatest costs to our LTL and full truckload carrier operations, as well as to our fleet of independent contractor drivers and third-party transportation providers who complete the physical movement of freight arranged by our other business operations. Accordingly, we may be adversely affected by the timing and degree of fluctuations and volatility in fuel prices. As is customary in our industry, most of our customer contracts include fuel-surcharge revenue programs or cost-recovery mechanisms to mitigate the effect of the fuel pricesprice increase over base amounts established in the contract. However, these fuel surcharge mechanisms may not capture the entire amount of the increase in fuel prices, and they also feature a lag between the payment for fuel and collection of the surcharge revenue. Market pressures may limit our ability to assess fuel surcharges in the future. The extent to which we are able to recover fuel cost charges in full for fuel costs changes may also vary depending on the degree to which we are not compensated due to empty and out-of-route miles or from engine idling during cold or warm weather.

Decreases in fuel prices reduce the cost of transportation services and accordingly, will reduce our revenues and may reduce margins for certain lines of business. Significant changes in the price or availability of fuel in future periods, or significant changes in our ability to mitigate fuel price increases through the use of fuel surcharges, could have a material adverse impact on our operations, fleet capacity and ability to generate both revenues and profits.

We use both internally developed and purchased technologytechnologies in conducting our business. Whether internally developed or purchased, it is possible that the userusers of these technologies could be claimed to infringe upon or violate the intellectual property rights of third parties.  In the event that a claim is made against us by a third party for the infringement of intellectual property rights, any settlement or adverse judgment against us, either in the form of increased costs of licensing or a cease and desist order in using the technology, could have an adverse effect on us and our results of operation.operations.

Future laws and regulations may be more stringent and require changes into our operating practices that influence the demand for transportation services or require us to incur significant additional costs. We are unable to predict the impact that recently enacted and future regulations may have on our businesses. In particular, it is difficult to predict which and in what form CSA, the ELD mandate or any other FMCSA regulations may be modified or enforced and what impact any such regulation may have on motor carrier operations or the aggregate number of trucks that provide hauling capacity to the Company. Higher costs incurred by us as a result of future new regulations, or incurred by our independent contractors or third-party transportation providers who pass the increased costs on to us, as a result of future new regulations could adversely affect our results of operations to the extent we are unable to obtain a corresponding increase in price from our customers.

OurUnder applicable SEC rules, our Chairman and Chief Executive Officer, Mr. Bradley S. Jacobs, controls, as the managing member of Jacobs Private Equity, LLC (“JPE”), (i) 67,500 shares of our Series A Convertible Perpetual Preferred Stock, which are initially convertible into an aggregate of 9,642,857 shares of our common stock, and (ii) 9,642,857 warrants initially exercisable for an aggregate of 9,642,857 shares of our common stock at an exercise price of $7.00 per share. Mr. Jacobs also directly owns 105,016 shares of our common stock and has employee stock options and restricted stock units convertible into an additional 545,029 shares of our common stock. Under applicable SEC rules, Mr. Jacobs, beneficially owns approximately 15% of our outstanding common stock as of December 31, 2015.2018. This concentration of share ownership may adversely affect the trading price for our common stock because investors may perceive disadvantages in owning stock in companies with concentrated stockholders. Our preferred stock votes together with our common stock on an “as-converted” basis on all matters, except as otherwise required by law, and separately as a class with respect to certain matters implicating the rights of holders of shares of the preferred stock. Accordingly, Mr. Jacobs can exert substantial influence over our management and affairs and matters requiring stockholder approval, including the election of directors and the approval of significant corporate transactions, such as mergers, consolidations or the sale of substantially all of our assets. Consequently, this concentration of ownership may have the effect of delaying or preventing a change of control, including a merger, consolidation, or other business combination involving us, or discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control, even if that change of control would benefit our other stockholders. Additionally, significant fluctuations in the levels of ownership of our largest stockholders, including JPE,shares beneficially owned by Mr. Jacobs, could impact the volume of trading, liquidity and market price of our common stock.

None.

As of December 31, 2015, XPO2018, the Company and its subsidiaries operated approximately 1,4511,535 locations, primarily in North America and Europe, including 201approximately 331 locations owned or leased by our customers. These facilities are located in all 48 states of the contiguous United States as well as globally.

We lease our current executive office located in Greenwich, Connecticut, as well as our national operations centerscenter in Charlotte, North Carolina and Dublin, Ohio.Carolina. As of December 31, 2015,2018, we owned thea shared-services center in Portland, Oregon the headquarters for our full truckload business in Joplin, Missouri, and the facility at which we conduct a portion of our expedited transportation operations in Buchanan, Michigan. In addition, we owned approximately 146138 freight service centers for our LTL business.business and 39 properties throughout Europe. We believe that our facilities are sufficient for our current needs and are in good condition in all material respects.needs.

We do not believe that the ultimate resolution of any matters to which we are presently party will have a material adverse effect on our results of operations, financial condition or cash flows. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our financial condition, results of operations or cash flows.

Not applicable.

Our common stock is tradedlisted on NYSEthe New York Stock Exchange (“NYSE”) under the symbol “XPO.” The table below provides the high and low closing sales prices for our common stock for the quarters included within 2015 and 2014.

As of February 26, 2016,8, 2019, there were approximately 272210 record holders of our common stock, based upon data available to us from our transfer agent. We have never paid, and have no immediate plans to pay, cash dividends on our common stock. We currently plan to retain future earnings and cash flows for use in the development

The graph below compares the cumulative 5-yearfive-year total return of holders of our common stock with the cumulative total returns, including reinvestment of any dividends, of the Russell 2000 Index, the Dow Jones Transportation Average Index and the Russell MidCap index. The rules of the SEC require that if an index is selected that is different from the index used in the immediately preceding fiscal year, the total return must be compared with both the newly-selected index and the index used in the immediately preceding year. The graph in our 2017 Annual Report on 10-K included a comparison of our common stock with the Russell 2000 Index and the Dow Jones Transportation Average Index. However, the Russell MidCap index, of which we are a component, generally includes companies with more comparable market capitalization to us than the Russell 2000 index. As a result, we believe that the Russell MidCap index is a more appropriate index and have included both the Russell 2000 and the Russell MidCap indices in the graph. The graph tracks the performance of a $100 investment in our common stock and in each index from December 31, 20102013 to December 31, 2015.2018.

of warrants by certain shareholders and 7,143 unregistered shares of its common stock as a result of the exercise of warrants by certain shareholders. The Company receivedshareholders for cash resulting in the receipt of $50,001 of total proceeds of $0.7 million as a result ofby the exercise of warrants, whichCompany. The proceeds received by the Company will be used for general corporate purposes. The issuance of these shares was exempt from the registration requirements of the Securities Act of 1933, as amended, in accordance with Section 4(a)(2) thereof, as a transaction by an issuer not involving any public offering.

This table includesThe following tables set forth our selected historical and quarterly consolidated financial data. During 2014 and 2015, we made a number of acquisitions, including the 2015 acquisitions of Con-way, Inc. and Norbert Dentressangle, and have included the results of operations of the acquired businesses from the date of acquisition. Additionally, we divested our North American Truckload operation in the fourth quarter of 2016. As a result, our period to period results of operations vary depending on the dates and sizes of these acquisitions and divestitures. Accordingly, this selected financial data for the last five years.is not necessarily comparable or indicative of our future results. This financial data should be read together with our Consolidated Financial Statements and related notes, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other financial data appearing elsewhere in this Annual Report.

The Company’s unaudited results of operations for each of the quarters in the years ended December 31, 2015, December 31, 20142018 and December 31, 2011 reflect beneficial conversion charges of $52.0 million on the Series C Preferred Stock, $40.9 million on the Series B Preferred Stock and $44.2 million on the Series A Preferred Stock, respectively, that were recorded as deemed distributions during the third quarter of 2015, the fourth quarter of 2014 and the third quarter of 2011, respectively.2017 are summarized below:

XPO Logistics, Inc., a Delaware corporation, together with its subsidiaries (“XPO,” the “Company,” “we” or “our”), is a top ten global provider of supply chain solutions. As of December 31, 2015, our integrated network of over 89,000 employees and 1,451 locations operated in 33 countries, and included leading positions in many fast-growing areas of transportation and logistics, representing diverse industry sectors and geographies.

Our integrated network includes approximately 89,000 employeeschief executive officer, who is the chief operating decision maker (“CODM”), regularly reviews financial information at 1,451 locations in 33 countries serving over 50,000 customers. Our global contract logistics platform includes 151 million square feet of facility space. Our global ground transportation network includes approximately 19,000 owned tractors and 47,000 owned trailers, 10,000 trucks contracted through independent owner operations, and access to more than 50,000 independent carriers.

During the year ended December 31, 2015,fourth quarter of 2018, our largest customer curtailed its business with us, resulting in a decrease in revenue of $46 million. In early 2019, this same customer further downsized the balance of its business with us. Based on 2018 data, we entered into transactions pursuant to which we issued an aggregate of 3,315,705 shares ofestimate that the downsizing will negatively impact our common stock to certain holdersfull-year 2019 revenue by approximately $600 million, or approximately two-thirds of the 4.50% Convertible Senior Notes due October 1, 2017 (the “Convertible Notes”) in connection with the conversion of $54.5 million aggregate principal amount of the Convertible Notes. Certain of these transactions included induced conversions pursuant to which we paid the holder a market-based premium in cash. The negotiated market-based premiums, in addition to the difference between the current fair value and the book value of the Convertible Notes, are reflected in interest expense. The number of shares of common stock issued in the foregoing transactions equals the number of shares of common stock presently issuable to holders of the Convertible Notes upon conversion under the original terms of the Convertible Notes.

Sales, general and administrative expense (“SG&A”) primarily consists of salary and benefit costs relating to customer acquisition, carrier procurement, billing, customer service, salaries and related expenses of thefor executive and administrative staff, acquisition-related costs, office expenses, technology services,certain administration functions, depreciation and amortization expense, professional fees, facility costs, bad debt expense and other purchased services relating to the aforementioned functions, and depreciation (excluding rail car, container and chassis depreciation related to our intermodal business, depreciation related to LTL service centers and depreciation related to our contract logistics facilities and equipment) and amortization expense. The purchased services category includes professional and consulting fees, legal fees and other services purchased from third-parties. The other costs.

SG&A expense category includes expense related to supplies, travel, communications, facilities, insurance, the provision for allowance for doubtful accounts, stock-based compensation and other administrative costs.

Other expense (income) for 2018 was $109 million of income, compared to $273.2with $57 million or 11.6% as a percentage of revenue, for 2014. Direct operatingincome in 2017. Components of Other expense increased due(income) that contributed to the acquisitionsincrease were: net periodic pension income of ND and Con-way, and the inclusion of a full year of New Breed’s results.

Interest expense for 2015 increased 351.5%2018 decreased 23.6% to $216.7$217 million, from $48.0$284 million in 2014. Interest2017. The decrease in interest expense reflects a reduction in 2015 relatesaverage total indebtedness, as well as lower rates attributable to our Senior Notes, Senior Debentures, Term Loan Facility, Convertible Notes, Euro Private Placement Notes, Asset Financing2018 refinancings.

Our consolidated income before income taxes in 2018 was $566 million, compared with $261 million in 2017. The increase was driven by higher operating income in our Transportation and Logistics segments, primarily due to revenue growth, reduced interest expense, lower foreign currency losses and higher pension income. With respect to our U.S. operations, income before taxes increased by $41 million in 2018, compared with the prior year, primarily reflecting a $78 million increase in operating income, a $73 million decrease in borrowing costs and a $50 million increase in other debt facilities. Interest expenseincome, including a gain of $24 million from the sale of an equity investment, partially offset by $166 million of foreign currency losses. With respect to our non-U.S. operations, income before taxes increased by

$264 million, reflecting $220 million of foreign currency gain. The foreign currency gain realized by our non-U.S. operations in 2014 relates2018 was partially offset by the foreign currency loss in our U.S. operations due to a portionhedging strategies, and to naturally offsetting positions of intercompany loans between the Senior Notes, Convertible Notes, and debt commitment fees.entities.

The Tax Act includes numerous changes to existing U.S. tax law. We recognizedhave carefully evaluated the Tax Act, and although we anticipate that ongoing regulatory guidance will be issued, our accounting for the enactment date effects is complete. We have analyzed the various provisions of the Tax Act and their impact on our operations and financial statements, and have reached the following final conclusions:

Our consolidated revenue for 20142017 increased 235.6%by 5.2% to $2,356.6$15.4 billion, from $14.6 billion in 2016. The increase primarily was driven by growth in our European contract logistics business, improvement in weight per day in our North American LTL business, and by the expansion of our North American truck brokerage and last mile businesses. These benefits to 2017 revenue were partially offset by the October 2016 divestiture of our North American Truckload operation, which had revenue of $432 million in 2016.

SG&A expense increased by $253.0was $1,661 million in 20142017, or 10.8% of revenue, compared to 2013. Aswith $1,652 million, or 11.3% of revenue, in 2016. The improvement in SG&A as a percentage of revenue SG&Aprimarily reflects savings from shared services, centralized procurement initiatives, lower professional fees, and technology-enabled labor efficiencies in our North American brokerage and intermodal businesses.

Foreign currency impact was a loss of $58 million in 2017, compared with a gain of $40 million in 2016. The loss in 2017 primarily reflects a $49 million loss on unrealized foreign currency option and forward contracts, due to acquisitions; increased sales force recruitment costs; investments in information technology;the strengthening of the euro and costs associated with expanding new and existing freight brokerage offices. SG&A expense also included restructuring, integration and transaction costs relatedthe British pound sterling relative to the acquisitionsU.S. dollar. The gain in 2016 primarily was due to a $40 million gain on unrealized foreign currency option and forward contracts.

Debt extinguishment losses were $36 million and $70 million in 2017 and 2016, respectively. Debt extinguishment losses in 2017 include $8 million for the refinancing of New Breed, Pacerour Term Loan Facility, $23 million for the redemption of the Senior Notes due 2021 and ACL as well as $48.4$5 million for the redemption of increased intangible asset amortization related to acquisitions.the Senior Notes due 2018. Debt extinguishment losses in 2016 include $35 million from the redemption of the Senior Notes due 2019, $18 million from the refinancing of the Term Loan Facility, and $17 million from the repurchase of Term Loan Facility debt.

Interest expense for 2014 increased 163.7%2017 decreased 21.3% to $48.0$284 million, from $18.2$361 million in 2013. Interest2016. The decrease in interest expense included $14.4 million of debt commitment feesreflects a reduction in relation to our acquisitions of New Breed and Paceraverage total indebtedness, as well as $5.5lower rates attributable to our recent refinancings. The reduction in average total indebtedness reflects our utilization of the proceeds from the sale of our North American Truckload operation in October 2016 to repurchase $555 million of expense relatedoutstanding indebtedness.

Our consolidated income before income taxes for 2017 was $261 million, compared with $107 million for 2016. The increase was driven by significantly higher operating income in our Transportation and Logistics segments, primarily due to the conversion of our Convertible Notes. The remainder ofrevenue growth, cost-saving initiatives and technology-enabled labor efficiencies, and by reduced interest expense, was relatedpartially offset by foreign currency losses. With respect to our Senior NotesU.S. operations, income before taxes increased by $348 million in 2017, compared with the prior year, reflecting a $127 million increase in foreign currency gain, a $110 million decrease in borrowing costs, a $92 million increase in operating income, and a $19 million increase in other income. With respect to our non-U.S. operations, income before taxes decreased by $194 million, reflecting a $208 million increase in foreign currency loss. The foreign currency loss realized by our non-U.S. operations in 2017 was partially offset by a gain in our U.S. operations due 2019, Convertible Notesto hedging strategies and other debt facilities.naturally offsetting positions of intercompany loans between the entities. The significant difference between U.S. income before tax of $278 million and non-U.S. loss before tax of $17 million reflects the fact that foreign currency movements benefited our U.S. operations and negatively impacted our non-U.S. operations in 2017.

Our effective income tax rates in 20142017 and 20132016 were 29.1%(38.2)% and 31.7%20.9%, respectively. We recognizedPrimary impacts to the 2017 effective tax rate were: a $173 million benefit related to the Tax Act; an $18 million benefit due to differences between foreign tax benefitrates and the U.S. tax rate; $13 million of incremental expense due to changes in both 2014 and 2013uncertain tax positions; a $10 million benefit due to the net operating losses incurred. Ourrevaluation of deferred tax liabilities resulting from enacted tax law changes in France and Belgium that lowered the statutory tax rates; and $9 million of excess benefit from stock-based compensation. Primary impacts to the 2016 effective tax rate was reduced by various non-deductible costs (including those relatedwere: a $13 million benefit due to the Company’s acquisitions, interest related to conversionsrevaluation of our convertible debt anddeferred tax liabilities resulting from an enacted tax law change in valuation allowance)France that lowered the statutory tax rate; and the mix of income among the various jurisdictions in which the Company does business.a $5 million benefit from stock-based compensation.

Revenue in our Transportation segment increased by 130.1%10.4% to $4,924.4 million$11.3 billion in 20152018, compared to $2,140.0 millionwith $10.3 billion in 2014. This2017. The increase was driven largelyled by the acquisitions of ND, Con-way, BTTgrowth in our freight brokerage, LTL and UX,last mile businesses in North America, as well as organic growth.our transportation business in the United Kingdom. Foreign currency movement contributed to revenue growth by approximately 1.2 percentage points in 2018.

Total net revenue for 2015Operating income in our Transportation segment increased 175.1% to $1,205.6 million from $438.2$646 million in 2014. Net2018, compared with $547 million in 2017. The improvement primarily was driven by revenue growth, improved profitability in our global freight brokerage business, operating margin was 24.5%improvement in 2015 as compared to 20.5% in 2014. The increase in net revenue is primarily attributable to acquisitions, price optimization, lower purchased transportation costsour North America LTL business, and the shedding of unprofitable business. We improved our margin percentages in mostexpansion of our transportation businesses from a year ago, including freight brokerage, last mile, expedite and global forwarding.dedicated truckload business in Europe.

Revenue in our Transportation segment increased by 204.7%3.0% to $2,140.0$10.3 billion in 2017, compared with $10.0 billion in 2016. This increase primarily was driven by 16.6% revenue growth in our U.S. last mile business, 16.8% growth in U.S. freight brokerage business, and a 5.1% increase in weight per day in our North American LTL business. The impact of these items was partially offset by the divestiture of our North American Truckload operation, which had revenue of $432 million in 20142016, and lower revenue in our global forwarding and managed transportation businesses.

Operating income in our Transportation segment increased in 2017 to $547 million, compared to $702.3with $459 million in 2013. This increase2016. The improvement was primarily driven largely by the acquisitions of Pacer, 3PD and NLM as well as the organicstrong revenue growth, of our freight brokerage locations.

Revenue in our Logistics segment increased by 1,178.1%16.0% to $2,768.4 million$6.1 billion in 20152018, compared to $216.6 millionwith $5.2 billion in 2014. This2017. The increase in revenue primarily was driven by strong demand for contract logistics in Europe and North America, led by the acquisitionsgrowth of NDe-commerce logistics. In Europe, the largest gains came from the fashion, food and Con-way,beverage, and retail sectors. In North America, the inclusion of a full year of New Breed’s results.largest gains came from the omnichannel retail and consumer packaged goods sectors. Foreign currency movement contributed to revenue growth by approximately 2.4 percentage points in 2018.

Net revenueRevenue in our Logistics segment increased by 9.8% to $5.2 billion in 2017, compared with $4.8 billion in 2016. The increase in revenue primarily was $216.6 milliondriven by strong demand for contract logistics in 2014. Direct operating expense for 2014 was $183.2 million, or 84.6% asEurope and North America. European logistics revenue growth reflected a percentage of revenue. SG&A expense was $15.8 millionsignificant benefit from new e-commerce and cold chain contract startups in 2014, or 7.2% as a percentage of revenue. the United Kingdom, Italy and the Netherlands. In North America, the largest gains came from the e-commerce, industrial and consumer packaged goods sectors.